05 October 2005

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Business Today

Competition office will only act when Sea Malta is privatised

James Debono

The Office for Fair Competition will only pronounce itself on the controversial Sea Malta privatisation “upon the actual signing of the agreement,” Director General for Consumer and Competition, Marcel Pizzuto told Business Today.
While the Office does not involve itself into how the privatisation process is to take place its role is that “of ensuring that the actual acquisition or privatisation would not substantially lessen competition in Malta,” Pizzuto told Business Today. Presently three companies are operating in the local shipping market.
These are Grimaldi Naples, Grimaldi Genoa and Sea Malta.
If Sea Malta is privatised the Grimaldis will have effective control over the entire sector, even if the two Italian companies are distinct from each other.
To date the Office has received a draft agreement between the government and Grimaldi and is presently carrying out “a competition analysis based on the need to maintain and develop effective competition in the Maltese market.”
Pizzuto also told Business Today that the Office has met with representatives of Sea Malta's prospective acquirer in order to advise them on the said matter.
In an interview with sister paper MaltaToday, Emanuele Grimaldi Chief Executive Officer of Grimaldi Naples described these talks as positive.
Back in June, Marcel Pizzuto told sister paper MaltaToday that the office’s advice on the matter will be based on the Merger regulations found in the Competition Act.
According to sub regulation 4 of Cap.379 of the Competition Act, concentrations that might lead to a substantial lessening of competition in the Maltese market are prohibited.
But the same act specifies those concentrations that bring about “gains in efficiency” that offset the effects of any “prevention or lessening of competition” are not prohibited.
Yet the company concerned will have to prove “that such gains cannot be otherwise attained, are verifiable and likely to be passed on to consumers in the form of lower prices, greater innovation, choice or quality of products and service.”

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